EFU Life Assurance (KAR:EFUL) ROC %

: 1.52% (As of Dec. 2023)

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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. EFU Life Assurance's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 1.52%.

As of today (2024-04-16), EFU Life Assurance's WACC % is 10.36%. EFU Life Assurance's ROC % is 1.21% (calculated using TTM income statement data). EFU Life Assurance earns returns that do not match up to its cost of capital. It will destroy value as it grows.

EFU Life Assurance ROC % Historical Data

The historical data trend for EFU Life Assurance's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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EFU Life Assurance Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

1.57

1.56

1.16

1.17

EFU Life Assurance Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
ROC %																1.66	1.25	0.83	1.23	1.52

EFU Life Assurance ROC % Calculation

EFU Life Assurance's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	EBIT * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	4068.195 * ( 1 - 48.31% )	/	( (160448.84455	+	199647.3425)	/ 2 )
=	2102.8499955	/	180048.093525
=	1.17 %

where

	Invested Capital		(A: Dec. 2022 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Balance Sheet Cash And Cash Equivalents	-	5% * Revenue )
=	178446.672	-	1659.008	-	( 18985.296	-	5% * 52929.531 )
=	160448.84455

	Invested Capital		(A: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Balance Sheet Cash And Cash Equivalents	-	5% * Revenue )
=	210203.902	-	1771.34	-	( 12563.22	-	5% * 75560.01 )
=	199647.3425

EFU Life Assurance's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	EBIT * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	4784.236 * ( 1 - 40.64% )	/	( (177520.814	+	197140.40495)	/ 2 )
=	2839.9224896	/	187330.609475
=	1.52 %

where

	Invested Capital		(Q: Sep. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Balance Sheet Cash And Cash Equivalents	-	5% * Revenue )
=	195397.89	-	2338.068	-	( 16524.161	-	5% * 19703.06 )
=	177520.814

	Invested Capital		(Q: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Balance Sheet Cash And Cash Equivalents	-	5% * Revenue )
=	210203.902	-	1771.34	-	( 12563.22	-	5% * 25421.259 )
=	197140.40495

Note: The EBIT data used here is four times the quarterly (Dec. 2023) data.

EFU Life Assurance (KAR:EFUL) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, EFU Life Assurance's WACC % is 10.36%. EFU Life Assurance's ROC % is 1.21% (calculated using TTM income statement data). EFU Life Assurance earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

EFU Life Assurance ROC % Related Terms

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EFU Life Assurance (KAR:EFUL) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Insurance » EFU Life Assurance Ltd (KAR:EFUL) » Definitions » ROC %

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Traded in Other Exchanges

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Address

8th East Street, Plot No. 112, EFU Life House, Phase 1, DHA, Karachi, SD, PAK

Website

https://www.efulife.com

EFU Life Assurance Ltd is engaged in providing insurance services. The company operates through various business segments namely investment linked business, conventional business, pension business, accident and health business, Family takaful investment linked business, and Family takaful protection business. It generates maximum revenue from the Investment Linked Business segment.

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